Correlation Between Vestis and Nike

Can any of the company-specific risk be diversified away by investing in both Vestis and Nike at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Vestis and Nike into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vestis and Nike Inc, you can compare the effects of market volatilities on Vestis and Nike and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Vestis with a short position of Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestis and Nike.

Diversification Opportunities for Vestis and Nike

-0.09

Correlation Coefficient

Vestis  Nike

Good diversification

The 3 months correlation between Vestis and Nike is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Vestis and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc and Vestis is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Vestis are associated (or correlated) with Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Vestis i.e., Vestis and Nike go up and down completely randomly.

Pair Corralation between Vestis and Nike

Given the investment horizon of 90 days Vestis is expected to generate 1.84 times more return on investment than Nike. However, Vestis is 1.84 times more volatile than Nike Inc. It trades about -0.02 of its potential returns per unit of risk. Nike Inc is currently generating about -0.41 per unit of risk. If you would invest  1,639  in Vestis on October 21, 2024 and sell it today you would lose (18.00) from holding Vestis or give up 1.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Vestis  vs.  Nike Inc

Vestis

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vestis are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vestis may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Nike Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nike Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward-looking signals remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Vestis and Nike

The main advantage of trading using opposite Vestis and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestis position performs unexpectedly, Nike can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nike will offset losses from the drop in Nike's long position.

The idea behind Vestis and Nike Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.